36. Last year, you deposit $25,000 into a retirement savings account at a fixed rate of 7.5 %. Today, you could earn a fixed rate of 8% on a similar type account. However, your rate is fixed and cannot be adjusted. How much less could you have deposited last year if you could have earned a fixed rate of 8% and still have the same amount as you currently will when you retire 40 years from today?© BrainMass Inc. brainmass.com June 3, 2020, 9:15 pm ad1c9bdddf
We first calculate the amount at the end of 40 years with a rate of 7.5%
We use the FVIF table to get the FV ...
The solution explains the difference in amount that needs to be saved given an increase in interest rate